Money laundering is an illegal act intended to conceal the source or use of illicit funds, by converting cash into untraceable bank transactions. Money laundering consists of 3 stages: Placement: the launderer introduces the illegal proceeds into the financial system. • Layering: the launderer engages in a series of operations on the illicit funds movements, in order to distance them from their source. This involves using different channels that make reverse tracing impossible. • Integration: the funds re-enter the formal financial system, and the launderer can invest the funds in any business of high-value assets .
An explanation for the three points above is: People that obtain their money through illegal activities such as selling girls, weapons, and drugs, usually get all their money through cash transactions, so they open a certain store or business so that they can tell the bank that the money they obtained is legal (from their business). That way they can deposit their cash into bank accounts thus invest in projects such as construction and real estate. Money laundering operations can occur in banks, money exchange firms, antique dealers, jewelry dealers, and real estate concerns.
Many stores in Lebanon can be suspicious of money laundering activities, such as clothes shops which open in very expensive are (such as Beirut Souks) and sell valuable brands. If observed carefully, these stores have an extremely low number of costumers daily, which makes you wonder how they are covering their rent and employee expenses. Fortunately, an organization called the Special Investigation Commission developed in Lebanon, and its role is to fight money laundering by applying regulations and laws in force. This is done by fostering interagency and global cooperation for fighting domestic and international money-laundering crimes.
The job of the SIC is to apply Law 318 which criminalizes illicit proceeds that are derived from the following offences: 1. The growing, manufacturing, or trading of narcotics. 2. Acts committed by associations of wrongdoers, that are specified by Articles 335 and 336 of the Penal Code, and internationally identified as organized crime. 3. Terrorist acts, as specified in Articles 314, 315 and 316 of the Criminal Code. 4. To finance or to contribute to the financing of terrorism, terrorist acts, or terrorist organizations, in accordance with the concept of terrorism as defined in the Lebanese Penal Code. . Illegal arm trade. 6. The offences of stealing or embezzling public or private funds or their appropriation by fraudulent means, counterfeiting, or breach of trust, incumbent on banks, financial institutions, and institutions listed in Article 4 of this Law, or falling within the scope of their activities. 7. Counterfeiting money, credit cards, debit cards or charge cards, or any official document or commercial paper, including checks. ” The SIC will be suspicious of money laundering and will begin its investigation of one of these sings is observed:
1. Consecutive transactions with total exceeding the threshold limit. 2. Unjustifiable account activity concerning the size and frequency of transactions. 3. Frequent deposits followed by frequent withdrawals. 4. Exchanging large amounts of small denomination bills for large denominations bills (same or different Currency) 5. Requests for wire transfers or bankers checks in exchange for currency. 6. High volume of bankers’ or travelers’ checks deposited into an account with no justifiable reasons. 7. Maintaining large number of accounts not commensurate with the type of business. 8. Cashing checks earned from gambling.